Subsidising the Sugar-Mumma Market

Several years ago, The Economist magazine did a very clever promotional mailing. It featured a pretend front cover of the magazine with the recipient’s name as part of the headline. So your editor’s read; ‘Nick Hubble, The World Awaits Your Decision’. The image used below the heading was a bunch of Tibetans looking longingly at the camera.

It’s still not clear what ‘the decision’ was. Probably to subscribe to The Economist. Thereby doing something for Tibetans, evidently.

Anyway, it is very gratifying to see your name on the front cover of a magazine. Especially if you are a central banker. And right now, the finance profession is staring longingly at the camera, saying, ‘Ben Bernanke, the world awaits your decision.’

As was painfully obvious to begin with, the drawdown of economic stimulus is exposing the ugly truth about the world economy. The money printing coined ‘QE2’ is over and economic indicators are taking a turn for the worse. Don’t even ask how it’s affecting the stock markets. So it’s up to the interventionists to intervene again. We can’t have too much reality now, can we?

The European Central Bank led the charge, letting investors know it would stand behind Italy’s upcoming bond auctions. The Swiss National Bank has launched its own QE, though largely to deal with an appreciating currency. Even Aussie investors are placing bets that the Reserve Bank of Australia’s next move in interest rates will be down.

But for Americans, the question is when Bernanke will take action. When will policy makers step in to save ‘capitalism’? And how?

More money printing has been on the cards all along for Americans, but there are several reasons why it may take some time before Bernanke steps up to the plate. First of all, there is his image to consider. Why make a controversial intervention when you can wait for things to get so bad the punters will beg for your return? How many people have graced the front cover of Time Magazine for saving the world twice?

Secondly – and perhaps more prescient to the less cynical amongst us – interest rates might not react to more money printing the way they’re ‘supposed to’. It’s kind of like complimenting your girlfriend. There is no way of knowing for sure how it will be interpreted. Interest rates might spike instead of settling down, as QE is intended to achieve. That’s because the inflationary effect of the new money may outweigh the initial effect on bond prices.

And if interest rates rise, the US becomes Europe. The debt becomes unmanageable. Speaking of which, Europe is back in the spotlight now that American politics has found its compromise on the debt limit. Spain has been bypassed in favour of Italy when it comes to news headlines. According to the Centre for Economics and Business Research, ‘realistically, Italy is bound to default, but Spain may just get away without having to do so.’ But all interest rates are up and rising.

Our suggestion to deal with the deficits by selling advertising space on currency notes and coins didn’t seem to provoke any comments. So here is another solution: Prostitution. And no, we don’t mean tax it.

The politicians who racked up the government debt should auction themselves off. (Particularly Italian Prime Minister Berlusconi.) Power is very sexy, we’re told, so prices would be high. The money raised could then go to paying off the debt.

If the idea makes you squeamish, consider that politicians don’t seem to be against selling sex to pay off debt when it comes to other people. Let me explain…

In the US and Australia, many government provided student loans are not cancelled if the borrower declares bankruptcy. The result has been a dramatic growth in student prostitution to deal with the education debt the government provided.

The website ‘Seeking Arrangement’ caters to this sugar-daddy market. For the estimated 280,000 students registered in the US, the sex is implied, but the government-granted loans that need to be paid are very real. We’re not sure about the figures for Australia, but the website actively targets Aussie students.

As horrific as these government-funded shenanigans may seem, there is a much bigger issue at hand.

‘Sugar babies outnumber sugar daddies by a ratio of nearly 10 to 1.’ In other words, there is a clearly discriminatory nature to this industry. Where are the sugar mummas? And what about the sugar babes (male students in deep debt)?

In order to address the deeply rooted sexual discrimination inherent in this industry, your editor demands a subsidy to encourage the sugar-mumma market. This would ensure that the assistance provided to males suffering under the government- inflated education expenses bubble is equal to that of females.

Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it.
To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.

“Why make a controversial intervention when you can wait for things to get so bad the punters will beg for your return? ”
Exactly Nick, exactly. It’s the same way they played the debt ceiling crisis just now. Eventually we had clueless types all over the place in the USA screaming at politicians to do the right thing, get their act together, stop fighting and save the nation. The media loved that of course.

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